Markets dip as Reeves defends government’s budget

Prime minister Keir Starmer is speaking right now espousing the social benefits of scrapping the two-child benefit cap and raising the minimum wage in last week’s budget.

He says lifting the cap is a fairness issue, an economic issue, and an issue that will help lessen the pressure on the NHS.

“I remember my family sitting around the kitchen table, worrying about the bills,” he says. “That’s still the reality for too many people.”

He argues the budget is about making life better for working people and giving children a chance in life.

“Tax rises make life harder for people” but “politics is about making choices,” he adds.

“We all know the risks of reckless borrowing — that is the path that Liz Trruss took.”

AJ Bell investment director, Russ Mould, said:

UK manufacturing was in expansion in November, according to S&P Global’s latest PMI for the UK, rising for a second consecutive month as the recent downturn in new business intakes halted.

Survey data indicated that manufacturers benefited from improved domestic demand and a softer contraction in new export work.

The PMI rose to a 14-month high of 50.2 in November, up from 49.7 in October. This was the first reading above the PMI’s neutral 50 mark since September 2024. The latest survey was conducted from 12-25 November, closing before the Chancellor’s Budget announcement on November 26.

Two of the PMI components (output and suppliers’ delivery times) were at levels consistent with improved operating conditions. Stocks of purchases and employment registered contractions and new orders were unchanged over the month.

The risk-off mood crept into crypto on Monday, too, with the selloff for bitcoin (BTC-USD) worsening. As of 8.30am in London the digital asset was trading around the $86,600 mark. Over the last 30 days it has lost more than 20% in value selling off from highs earlier in the year of close to $125,000.

Economic uncertainty in the US is among factors weighing on crypto this morning, with uncertainty around the possibility of interest rate cuts top of mind for traders.

Fresh warnings from the People’s Bank of China related to activity surrounding digital currencies have also weighed on prices and crypto-related stocks listed in Hong Kong.

Ethereum (ETH-USD) also sold off losing about 5.8% compared with the day before to trade at the $2,836 mark.

Our US team writes:

US stock futures sank on Monday morning, with Wall Street’s strong late-November rebound looking set to hit a speed bump in the first trading day of December.

Contracts on the Dow Jones Industrial Average (YM=F) fell 0.5%. S&P 500 futures (ES=F) dropped 0.6%, and Nasdaq 100 futures (NQ=F) slid 0.8%.

The declines follow holiday-shortened weekly gains for equities. The S&P 500 (^GSPC) surged 3.7% and the Nasdaq Composite (^IXIC) jumped nearly 5%, snapping out of a choppy November. The Dow (^DJI) logged a solid 3.2% rise.

Monday kicks off the first trading session of December, historically one of the market’s friendliest months. However, much of that boost can be attributed to the “Santa Claus rally,” a period of heightened trading over the Christmas break. This year, analysts are pulling back from the concept of a booming holiday season after much of the year has been unpredictable — while consistently bucking seasonal trends.

Bloomberg reported this morning:

Hello from London. Lucy Harley-McKeown here. The budget is still top of the agenda this week, as prime minister Keir Starmer did the rounds on TV this morning defending it. Chancellor Rachel Reeves has been accused of telling lies about the state of the economy as cover for hiking taxes and expanding the benefit bill.

Starmer is set to speak at around 10.30am in defence of the various tax rises and new spending pledges.

Market watchers will also be monitoring the oil price as the OPEC+ meet to discuss output.

In terms of data releases, PMIs for manufacturing will give a read on the health of industry in Japan, Asia, Europe and the UK.

Over in the US, they will be anticipating fresh data on car sales.

Let’s get to it.